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Recap of the Small and Start-Up Business Listening Session

On August 31, 2011, the Office of the Citizenship and Immigration Services Ombudsman (Ombudsman’s Office) hosted small and start-up business participants to a listening session about immigration services. The program included:

  • Remarks from Citizenship and Immigration Services Ombudsman January Contreras; Small Business Administration Ombudsman Esther Vassar; U.S. Department of Commerce Select USA Deputy Executive Director Aaron Brickman; University of California, Berkeley Visiting Scholar Vivek Wadwa;
  • A panel discussion with immigration practitioners; and
  • An open forum for attendees to raise ideas and issues of interest or concern.

The panel was moderated by Ombudsman Office Senior Advisor Fred Troncone, Malcolm Goeschl, Goeschl Law Corporation, and Angelo Paparelli, Seyfarth Shaw LLP.

This listening session brought together officials from the Federal Government, experienced or expert professionals to represent a private sector perspective, as well as members of the public who attended. A summary of the presentations and discussions from this event is provided below.

Recap of the DHS Citizenship and Immigration Services Ombudsman’s Office Small and Start-Up Business Listening Session

University of California Los Angeles, Faculty Center
Los Angeles, CA
August 31, 2011

“…today’s small company may be tomorrow’s Google, or Amazon or Microsoft.”
Listening Session Participant

Highlights of Remarks

January Contreras, Department of Homeland Security (DHS) Ombudsman for Citizenship and Immigration Services
Ombudsman Contreras welcomed participants and explained that the Ombudsman’s Office hosted this event to help facilitate a conversation on immigration service issues impacting small and start-up businesses. Ombudsman Contreras explained that this informal listening session was an opportunity for the public to share their suggestions, concerns, and ideas about how to improve immigration services to better foster economic development and job creation. Ombudsman Contreras noted the responsibility and challenge that United States Citizenship and Immigration Services (USCIS) has to balance fraud detection and customer service. Stakeholders frequently report that the USCIS adjudicatory process is in urgent need of updated policies and practices for today’s business enterprises.

Ombudsman Contreras further noted the particular concerns raised to the Ombudsman’s Office regarding obstacles for small businesses and start-up companies. Ombudsman Contreras explained that the suggestions and comments obtained during the session would be shared with DHS and USCIS leadership, but the source of any particular comment would be kept confidential. Ombudsman Contreras further reminded the participants that DHS and USCIS have begun working to address these concerns and improve the environment for job creation. In August 2011, Secretary Napolitano announced efforts to "fuel the nation’s economy and stimulate investment by attracting foreign entrepreneurial talent of exceptional ability or who otherwise can create jobs, form start-up companies, and invest capital in areas of high unemployment." Ombudsman Contreras shared her objective for this listening session to be a forum for feedback that can help DHS and USCIS be informed about the challenges that exist for small and start-up businesses in the current environment.

Small Business Administration (SBA) National Ombudsman: Working Together

Ombudsman Esther Vassar

The SBA National Ombudsman's primary mission is to assist small businesses when they experience excessive or unfair federal regulatory enforcement actions, such as repetitive audits or investigations, excessive fines, penalties, threats, retaliation or other unfair enforcement action by a federal agency.

SBA often partners with other Federal agencies, including DHS, to address systemic problems. When the National Ombudsman receives comments from small businesses, the office acts as a liaison between businesses and Federal agencies. The National Ombudsman forwards those comments to Federal agencies for a high level review, and agencies are requested to consider the fairness of their enforcement action.

With the Start-Up America initiative, the White House recognizes that start-ups and small businesses are engines of job creation. The National Ombudsman is aware that regulatory burdens are often heavier to carry for small and start-up businesses. Ombudsman Vassar highlighted the partnership between her office and the Ombudsman’s Office and promised to work together to share these policy and regulatory concerns with leadership in SBA and DHS.

Department of Commerce (DOC) SelectUSA Office: Promoting Business Investment in the United States

Deputy Executive Director Aaron Brickman

SelectUSA, established by Executive Order 13577 on June 15, 2011, encourages, facilitates, and accelerates business investment in the United States to create jobs, spur economic growth, and promote American competitiveness internationally. Mr. Brickman shared that Select USA was geographically neutral in the United States and engages in international and domestic business investment. Specifically, SelectUSA facilitates business inquiries, acts as an ombudsman and advocate for business investors, connects investors with State/Local economic development organizations, conducts investor outreach, and leads and coordinates an interagency working group with DOC, DHS, and the Department of State (DOS) to address barriers for foreign business investment in the United States. Through investor outreach, SelectUSA hopes to correct the misrepresentation that the United States does not welcome foreign investment by ensuring that domestic and international audiences are aware of investment incentives in the U.S. market.

Mr. Brickman shared how SelectUSA provides actionable information to foreign firms to help them:

  • Incorporate a business in the United States
  • Understand basic U.S. tax and legal concepts
  • Learn about incentives available to businesses in the United States.
  • Connect with U.S. state, city, or regional economic development offices to learn about investment opportunities
  • Apply for a business-related visa

Investors can communicate with SelectUSA staff by phone or email in Washington, DC, or meet with members of the U.S. Foreign Commercial Service in more than 75 countries around the world.

Participants commended SelectUSA for promoting the availability of opportunities in the United States for foreign investment but also expressed concern that SelectUSA’s efforts were often hindered by contrary government policies and practices, noting restrictive policies and/or practices attributed to USCIS and DOS. Participants expressed surprise that an interagency workgroup was working on these issues, and urged for greater examination of how the policies and practices implemented by front line decision makers at USCIS and DOS may unnecessarily undermine and conflict with the message that foreign investors are welcome in the U.S.

Participants encouraged SelectUSA to continue partnering with other federal agencies including DOS and USCIS to promote the availability of opportunities for foreign investment by immigrant investors.

Connecting the Dots – Immigration, Innovation and Entrepreneurship

Vivek Wadhwa

Mr. Wadhwa, an academic, researcher, writer and entrepreneur, shared his insights into competitive advantages for the U.S. economy from immigrant entrepreneurs, skilled immigrants, and foreign students in U.S. professional degree programs, and specifically focused on technology entrepreneurs.

Mr. Wadhwa expressed his concern that flaws in the U.S. immigration system have created a backlog of skilled workers waiting for permanent resident status, leading talented and highly skilled potential job creators to leave the country and instead contribute to an economy that competes with U.S. businesses. Mr. Wadhwa further criticized current Federal government policies and practices relevant to this workforce as causing a chilling effect on new immigrant entrepreneurs by limiting avenues and creating unreasonable barriers to legal immigration.

Mr. Wadhwa’s research shows, among other things, that more than one in four U.S. technology start-ups from 1995 to 2005 was founded by an immigrant. Mr. Wadhwa expressed concern that the overall number of new tech start-ups and related jobs in the United States will be significantly lower in the years to come because U.S. immigration policies deter, rather than facilitate, immigrant entrepreneurs.

Highlights from the Panel Discussion and Listening Session Open Forum: Most Significant Immigration Issues Affecting Small and Start-Up Businesses

During the panel, Mr. Goeschl and Mr. Paparelli highlighted immigration issues affecting small and start-up businesses.
Throughout the panel and open forum, participants raised many issues that were identified as systemic problems and shared suggestions for further improvement. Summaries of the comments and feedback follow:

A Level-Playing-Field for Small Businesses (including Start-Ups)

Panelists and participants focused on what they perceive to be restrictive USCIS interpretations and policies, and a one-size-fits all approach to address fraud that does not recognize the characteristics of small businesses and today’s start-up companies. The panelists agreed that USCIS has to balance priorities, but explained that USCIS has a lot of work to do to “level the playing field” for small employers.

As an example, participants reported that USCIS frequently questions the legitimacy and/or ability of an underlying business decision by a small or start-up business to hire a specialty worker. Participants explained that this line of questioning falls outside the scope of relevant inquiry for adjudications. Numerous participants cited examples including marketing managers, graphic artists, and accountants.

Comments were echoed about a general sense that USCIS scrutinizes small and start-up businesses to a harsher degree than larger corporations. For example, frustration was expressed that service centers and the Administrative Appeals Office (AAO) routinely deny cases based on a misunderstanding of the business requirements for small and start-up business, which significantly differ from the organizational structure of larger corporations. Panelists and participants stated that USCIS frequently expects a small business to have the floor space and organizational complexity of large businesses.

Participants expressed concern that smaller businesses, noting especially start-up businesses, are disproportionately impacted by policies and procedures that are shaped for the needs and business requirements of larger corporations. For example, participants noted that, despite specific statutory mention of functional managers, USCIS sometimes concludes that a business is too small to need the position, the position does not fit into a narrow definition of a functional manager held by a specific adjudicator, or the position does not qualify because it would not immediately have subordinate personnel.

Participants urged that USCIS reevaluate its anti-fraud policies to ensure that small and start-up businesses are not disproportionately impacted. As one participant shared, “today’s small company may be tomorrow’s Google, or Amazon or Microsoft.” Participants also referenced the Small Business Non-Retaliation Policy adopted by USCIS in 2008. This policy stipulates that small businesses filing complaints against the USCIS over its policies and procedures will not be subject to retaliation of any kind. Participants suggested that similar efforts must be renewed by USCIS to ensure a level-playing field for all businesses regardless of size.

New Widely-Used Industry Practices and Business Models

The panelists shared that H-1B specialty occupation visas are particularly difficult to obtain for small and start-up businesses. On January 8, 2010, USCIS issued a guidance memorandum on establishing employee-employer relationship in H-1B petitions, “Determining Employer-Employee Relationship for Adjudication of H-1B Petitions, Including Third-Party Site Placements: Additions to Officer’s Field Manual (AFM) Chapter 31.3(g)(15)(AFM Update AD 10-24),” commonly referred to as the “Neufeld Memo”. Panelists explained the Neufeld Memo raised new concerns and was cited by participants as evidence of how USCIS decisions can be incompatible with traditional and legitimate industry practices, and that USCIS needs a better understanding of standard business practices in use today.

The Neufeld Memo outlined a requirement for an owner-beneficiary to appoint a board of directors. Participants described this as a highly limiting and unusual requirement as most entrepreneurs want to lead the organizations they create, at least for some foreseeable amount of time. Participants reiterated that owner-beneficiaries are job creators and discouraged what were described as artificial impediments. A recommendation was made to amend regulations so that owner-beneficiaries could be authorized under a variety of business structures including sole proprietors, C corporations, and Limited Liability Corporations. Currently, an E-2 visa is the only practical avenue for owner-beneficiaries but they are not available to persons from all countries.

Intracompany Manger, Executive and Specialized Knowledge (L Visa) Issues

Concerns were raised by many about strict adjudications of L visas petitions submitted by small and start-up businesses. Participants noted that there is no labor market test required in L petition filing, yet participants experienced situations where UCSIS issued multiple requests for evidence (RFEs) or denials with reference to labor market requirements without clear explanations.

The panelists shared that start-up companies, in particular, are finding that they are not being granted a one-year period of admission for the beneficiary of a new office, despite regulatory provisions that instruct adjudicators to consider the size and phase of development of the business. Beyond this, it was noted that one year is often not sufficient given the time it may take post-petition approval for a beneficiary to obtain a visa and arrive in the United States to start business operations. Extensions of the one-year period seem to be increasingly denied because there is not an understanding of the progress that has been made by the business.

Validation Instrument for Business Entities (VIBE)

Significant reservations were expressed about VIBE based on actual experience with database inaccuracies and outdated information, particularly for new and small businesses. Participants reported that because erroneous information is relied upon by USCIS, significant delays in petition processing and additional cost burdens are placed on petitioners to respond to RFEs, Notices of Intent to Deny, and denials. There were further concerns about feeling compelled to pay additional fees to the private information provider that VIBE data is based on in order to timely create or update their profiles and to secure a petition approval.

DHS implementation of immigration laws in support of entrepreneurship

Participants welcomed the recent support of DHS leadership for business-related immigration opportunities, especially those that focus on small and start-up businesses. There was a common theme that implementation on the ground often did not mirror the goals, priorities, and policies promoted by leadership. Participants also expressed concern that implementation of such policies lacked consistency between USCIS service centers.

Participants suggested that USCIS create leadership positions focused specifically on promoting a greater understanding of business immigration. Participants also reiterated the need for a comprehensive review of laws and policies that negatively impact small businesses with focus on revising the USCIS AFM to clarify ambiguous language related to small and start-up businesses. Participants suggested that USCIS should focus efforts on immigrant entrepreneurs stuck in the green card backlog by creating a temporary, legal channel to get the ball rolling on their U.S. investments and small businesses which may require a statutory change.

Finally, participants also suggested that USCIS should allow premium processing for AAO business-related appeals. Participants reported that most petitioners will not file an appeal as processing times are long and reversal rates appear to be low. Instead, they move on, and in some case, companies are not started, jobs are not created, or U.S. jobs dependent on the nonimmigrant worker may be lost.

Training on Small and Start-Up Business Adjudications

Participants were optimistic about the recent policy focus by Secretary Napolitano and Director Mayorkas on immigrant entrepreneurship. However, they also expressed concerns that requirements for particular statuses and visas are being narrowly construed by USCIS adjudicators and DOS visa officers, in such a way that prevents small and start-up business from qualifying. Participants expressed concerns that narrow interpretations stemmed from an underlying lack of understanding of the business practices for small and start-up companies and suggested that additional training from subject matter experts on these issues would be helpful. Another possible option would be dedicated adjudication units at service centers to handle small and start-up business petitions. In addition, because participants identified differences in practices between paired service centers, they questioned how USCIS is addressing such discrepancies.

Brain Drain

Participants shared their experiences with highly educated, successful immigrant professionals leaving the United States to pursue opportunities elsewhere because navigating the U.S. immigration system means running into closed doors, ultimately proving too challenging.

  • Venture Capitalist Case Example: An entrepreneur from Canada created a start-up tech company and generated a large number of U.S. jobs. This business success was often coupled with major hurdles to ensuring the participant’s legal immigration status. Through a combination of Trade Nafta and H-1B visas, this venture capitalist was able to maintain legal status to build the company. The individual is currently determining whether other permanent employment-based immigration statuses are available so he can remain in the United States. This uncertainty makes it difficult to plan long-term for the future of the company.


The Ombudsman's Office will keep moving forward to help government officials become familiar with the challenges and opportunities that exist in immigration services for small and start-up business, as we do for many other participants across the spectrum of immigration benefits. Garnering feedback from the public about immigration services for small and start-up businesses is one step in our efforts to fulfill our statutory mission to assist individuals and employers with problems with USCIS.

If you have additional information, comments, or questions related to immigration issues for small and start-up businesses, please contact CISOmbudsman.PublicAffairs@hq.dhs.gov.

Last Updated: 06/08/2021
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